Freehold, NJ · Member since 2021 · 77 posts · 43 votes
I'll try to be brief, lol.
I'm trying to get prepped a bit before seriously looking for my first deal (wholesale or flip).
Background:
I cannot get any first time home buyer breaks and can't house hack. I have no high value assets. My credit is garbage (had to do bankruptcy last year) and I only have access to $10K (assuming I can roll my 401k into an SDIRA. If not, I only have $3K). No family or friends who have (or are WILLING, lol) to lend.
Even assuming the 10k, it's nowhere near the 20-30% down payment needed for hard lenders.
Add to that, I'm in Central NJ so nothing is cheap.
I've read about assigning contracts and all that ron legrand-type stuff, but it all seems scammy if not illegal, and I refuse to run a dishonest business.
There has to be a way to get going, but right now I'm at a loss. Any advice or guidance is appreciated.
@David Rosenhaus Read the book on "Long Distance Real Estate Investing" by David Greene. Then invest where it makes sense. Much easier to get started this way.
I live in Phoenix, AZ and chose Durham, NC to buy two duplexes getting started. I used a HELOC on a primary residence and pulled off the BRRRR method. Much easier to buy something out of state and will make you a better investor by forcing you to build systems/processes.
Do you have anyone in your network looking to buy? My parents invested by partnering with my sister and because she lives in the house, they only had to put down 5% and are able to get primary mortgage interest rates. She house hacks, and they make some money on the rent and appreciation.
Real Estate takes money sadly.... so IMO the first skill you will need is how to manage money - especially if you want to partner with others..... so learn how to manage your own finances, and start saving at least 10%, study, maybe join your local REI groups, and then when you have enough funds saved AND your credit allows a decent mortgage you will be ready. But honestly trying to invest with no money and no experience is probably going to result in negative outcomes.
I will advice , to keep reading and learning. if you want to accelerate your process , use those 3k for education ...
When I started My credit was at 521 , my wife didn't believe in me what so ever ( My fault not hers) . 0 in assets and 0 saved.. What got me through was the knowledge I gain on courses within 3 or 2 years prior and when the opportunity came it was like a God sent sign I just new what to do and how to do it..
The other advices is to inform yourself a bit more on the wholesale process. ( is legit) though you have to really know how to do it so you are not liable ,( like anything else)
the other thing you could do that I highly recommend 100% .. is to leverage from a company that is already established and doing it, ( wholesale , Traditional RE as well) that way you get paid to learn and not the other way around ...
Thanks, David. I completely get to that wholesaling and flipping are one-offs. Right now I need time to build my credit and my bankroll, so they are actually perfect avenues for me.
Thanks George. You hit the nail right on the head and your experience is exactly what I'm dealing with right now. And your plan is exactly what I have decided to do. After reading the other replies and doing even more research on my own, it is absolutely the way to go to build a solid foundation.
@David Rosenhaus, have you thought about bird-dogging for other investors? Drive around or walk a neighborhood, look for properties that show evidence of owner distress or disinterest, track those owners down and just ask if they would be interested in selling. At the same time, attend meet-ups, etc., and try to network with flippers and real estate agents who work with flippers. When you find a potential seller, pass it along to the flipper or agent, and just ask for a modest finder’s fee of they close it. It’s less involved than wholesaling—you’re not getting the property under contract, just passing along the lead. You don’t need money or credit, and the flippers might be willing to teach you a little about the business along the way. All it takes is time.
I ran across a fire-damaged property in my regular travels one day, found the owner and asked if he wanted to sell it, and to my utter shock he said “Yes.” I made a call to a flipper I barely knew, they put the deal together, and I got $1,000. The best part was, that flipper turned it to another investor THE DAY AFTER HE CLOSED for more than double what HE paid, and he did so well that he sent me another $5,000. Six grand for one phone call. That’s an extreme example, of course, but it can be a good way to take inexpensive action, learn, and earn.
Thanks, David. I completely get to that wholesaling and flipping are one-offs. Right now I need time to build my credit and my bankroll, so they are actually perfect avenues for me.
There are, of course, ways to get funded WITHOUT having your credit checked. It's too long a discussion for this forum, but again, there are classes available to help us learn.
Yes, build your personal credit, but also build business credit so your entities can finance acquisitions instead of you personally. There classes on this available as well.
Again, if you try to sell contracts on properties before you learn what investors look for in a deal, that will be less than effective. Flipping without getting REI education typically leads to mistakes which can cost 10x or more what you would invest to get educated FIRST.
My advice would be to focus on fund raising - and learning how to do it - while (re)building your personal credit and building business credit. Your own money and credit will run out rather quickly. Raising - and recovering - OPM provides essentially unlimited deal funding.
Hi David, you don't need money or credit to get started with wholesaling. Get a free source list at the county assessor's office. Identify properties that you can get under contract. Contact the owners & get some properties under contract. Find cash buyers and sign the contracts over to them. Wait for your fees to arrive. Do this several times & you'll have enough cash to buy a rental property.
I don't hear any big issues here other than your cost of money. Use this time to read BP books a few times and familiarize yourself with the processes. Start calling local lenders, property managers, and contractors to put your team together where you choose to invest. Use BP community to your fullest and make sure to provide value and leverage the community.
Your credit is no problem with the majority of HML nor for most of them do you require a w-2. Just proof of funds. So get creative or find a partner. Theres no easy way through this and no shortcuts.
You will either need to go get a job and save your $$$ (this is what I would recommend in addition to number 2)
or you will need to find a partner who can provide the $$$ while you provide deals and management.
Wishing you the best on the journey, just remember.... youtube is just good TV theres a lot that goes into this that can't possibly be covered even in a 45 min podcast.
There is nothing wrong with assignments, it is my primary business. It is only slimy if you are not honest with people. For example, I had a friend selling a distressed home. He found a buyer. That " buyer" posted it to MLS without his permission trying to assign it to another buyer. My friend saw the listing and was extremely upset to say the least.
@Johnathan Boyle listen to this podcast - it will guide you https://podcasts.apple.com/us/podcast/biggerpockets-real-estate-podcast/id594419649?i=1000466828441
Richest Man in Babylon is a phenomenal book to help establish the building blocks of financial independence. I still read that book at least once a year to calibrate!
If I remember correctly in a recent podcast episode with Scott McGillivray he said that at his seminars many of the people getting started where in their 50s and 60s
Thank you for that. I actually live two blocks from the Hall of records so that should not be too difficult. What info am I actually pulling from there?
I think getting your license is a great idea if you are thinking about wholesaling. Start part time and see if you like it.
I was able to get a house on land contract, so my bad credit was not as much of an issue since I had a good job. I did get help with a down payment, but you could work some side hustles to come up with money for a down payment. Sometimes you can get housing assistance through state programs. I was able to live there for a little while, fix it up, refinance, fix some more and it's almost sold. I felt like it took so long, but finally making some progress. Just another idea to try something different to get started. Be patient, it takes time.
Thanks, Evan. Yeah, the more I look into the proper way of wholesaling, I am learning very quickly the proper and legal way of getting it done. I think taking that approach could automatically put me miles ahead of everybody else.
That said, I'm going to do something that does not seem to be popular (that I've seen so far)... I'm going to speak to a local real estate attorney and find out what the law actually is instead of just listening to speculations and opinions. 😁
I have to echo much of what I’ve been seeing in previous comments.
Learn learn learn and network network network!
You're off to a good start with this post. So many great comments and advice. I know you're in a tough position because NJ is a tough place to get started. I live not to far from you and look for deals all the time. I have yet to find anything that makes sense which is why I began my REI adventure in FL. I honestly think taking your time to meet other investors learn from them and save up money will be your best bet. It's a sellers market right now but it will come back around. Be ready to pounce once it does. Once COVID restrictions loosen a little more the meet ups should start back up. There is 1 in Belmar and 1 in Asbury Park that I recommend attending when you can. I personally can't wait for them to start back up. They've been doing virtual events which might be good for you as well but I prefer in person meet ups myself.
You don’t necessarily need to be the “money guy”. Find a partner and bring something else to the table. Maybe you can manage contractors or do renovation work.
I think you’re starting off by saying “cannot” and “can’t” too many times. Rephrase and ask yourself how you can.
Also good to go to your local free public library and rent a couple of the classics.
NJ is a very expensive market. Find an area in NJ or look in a different state.